Who said this? "All the evidence shows that beyond the sort of standard of living which Britain has now achieved, extra growth does not automatically translate into human welfare and happiness." Was it a) the boss of Greenpeace, b) the director of the New Economics Foundation, or c) an anarchist planning the next climate camp? None of the above: d) the former head of the Confederation of British Industry, who currently runs the Financial Services Authority. In an interview broadcast last Friday, Lord Turner brought the consumer society's most subversive observation into the mainstream.

In our hearts most of us know it is true, but we live as if it were not. Progress is measured by the speed at which we destroy the conditions that sustain life. Governments are deemed to succeed or fail by how well they make money go round, regardless of whether it serves any useful purpose. They regard it as a sacred duty to encourage the country's most revolting spectacle: the annual feeding frenzy in which shoppers queue all night, then stampede into the shops, elbow, trample and sometimes fight to be the first to carry off some designer junk which will go into landfill before the sales next year. The madder the orgy, the greater the triumph of economic management.

As the Guardian revealed today, the British government is now split over product placement in television programmes: if it implements the policy proposed by Ben Bradshaw, the culture secretary, plots will revolve around chocolates and cheeseburgers, and advertisements will be impossible to filter, perhaps even to detect. Bradshaw must know that this indoctrination won't make us happier, wiser, greener or leaner; but it will make the television companies £140m a year.

Though we know they aren't the same, we can't help conflating growth and wellbeing. Last week, for instance, the Guardian carried the headline "UK standard of living drops below 2005 level". But the story had nothing to do with our standard of living. Instead it reported that per capita gross domestic product is lower than it was in 2005. GDP is a measure of economic activity, not standard of living. But the terms are confused so often that journalists now treat them as synonyms. The low retail sales of previous months were recently described by this paper as "bleak" and "gloomy". High sales are always "good news", low sales are always "bad news", even if the product on offer is farmyard porn. I believe it's time that the Guardian challenged this biased reporting.

Those who still wish to conflate welfare and GDP argue that high consumption by the wealthy improves the lot of the world's poor. Perhaps, but it's a very clumsy and inefficient instrument. After some 60 years of this feast, 800 million people remain permanently hungry. Full employment is a less likely prospect than it was before the frenzy began.

In a new paper published in Philosophical Transactions of the Royal Society, Sir Partha Dasgupta makes the point that the problem with gross domestic product is the gross bit. There are no deductions involved: all economic activity is accounted as if it were of positive value. Social harm is added to, not subtracted from, social good. A train crash which generates £1bn worth of track repairs, medical bills and funeral costs is deemed by this measure to be as beneficial as an uninterrupted service which generates £1bn in ticket sales.

Most important, no deduction is made to account for the depreciation of natural capital: the overuse or degradation of soil, water, forests, fisheries and the atmosphere. Dasgupta shows that the total wealth of a nation can decline even as its GDP is growing. In Pakistan, for instance, his rough figures suggest that while GDP per capita grew by an average of 2.2% a year between 1970 and 2000, total wealth declined by 1.4%. Amazingly, there are still no official figures that seek to show trends in the actual wealth of nations.

You can say all this without fear of punishment or persecution. But in its practical effects, consumerism is a totalitarian system: it permeates every aspect of our lives. Even our dissent from the system is packaged up and sold to us in the form of anti-consumption consumption, like the "I'm not a plastic bag", which was supposed to replace disposable carriers but was mostly used once or twice before it fell out of fashion, or like the lucrative new books on how to live without money.

George Orwell and Aldous Huxley proposed different totalitarianisms: one sustained by fear, the other in part by greed. Huxley's nightmare has come closer to realisation. In the nurseries of the Brave New World, "the voices were adapting future demand to future industrial supply. 'I do love flying,' they whispered, 'I do love flying, I do love having new clothes … old clothes are beastly … We always throw away old clothes. Ending is better than mending, ending is better than mending'". Underconsumption was considered "positively a crime against society". But there was no need to punish it. At first the authorities machine-gunned the Simple Lifers who tried to opt out, but that didn't work. Instead they used "the slower but infinitely surer methods" of conditioning: immersing people in advertising slogans from childhood. A totalitarianism driven by greed eventually becomes self-enforced.

Let me give you an example of how far this self-enforcement has progressed. In a recent comment thread, a poster expressed an idea that I have now heard a few times. "We need to get off this tiny little world and out into the wider universe … if it takes the resources of the planet to get us out there, so be it. However we use them, however we utilise the energy of the sun and the mineral wealth of this world and the others of our planetary system, either we do use them to expand and explore other worlds, and become something greater than a mud-grubbing semi-sentient animal, or we die as a species."

This is the consumer society taken to its logical extreme: the Earth itself becomes disposable. This idea appears to be more acceptable in some circles than any restraint on pointless spending. That we might hop, like the aliens in the film Independence Day, from one planet to another, consuming their resources then moving on, is considered by these people a more realistic and desirable prospect than changing the way in which we measure wealth.

So how do we break this system? How do we pursue happiness and wellbeing rather than growth? I came back from the Copenhagen climate talks depressed for several reasons, but above all because, listening to the discussions at the citizens' summit, it struck me that we no longer have movements; we have thousands of people each clamouring to have their own visions adopted. We might come together for occasional rallies and marches, but as soon as we start discussing alternatives, solidarity is shattered by possessive individualism. Consumerism has changed all of us. Our challenge is now to fight a system we have internalised.